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Past Bad Speakers, Performance Bonds & Unfree Speech

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Past Bad Speakers, Performance Bonds & Unfree Speech \\jciprod01\productn\H\HLS\3-2\HLS201.txt unknown Seq: 1 9-MAY-12 17:24 Past Bad Speakers, Performance Bonds & Unfree Speech: Lawfully Incentivizing “Good” Speech or Unlawfully Intruding on the First Amendment? Clay Calvert* ABSTRACT Using the recent legal woes of television pitchman Kevin Trudeau as an analytical springboard, this article examines the multiple First Amend- ment issues and red flags raised by the imposition of performance bonds on “past bad speakers” as conditions precedent for their future speech. Per- formance bonds, the article argues, blur the traditional line that separates prior restraints from subsequent punishments in First Amendment jurispru- dence. They also represent a form of government intrusion in the market- place of ideas — a form of interventionism, premised on financial incentivism — that ostensibly discourages dangerous or otherwise unlawful speech from re-entering the speech market. This article also addresses the proper standard of judicial scrutiny that should be used to evaluate the va- lidity of performance bonds. Furthermore, it considers whether the scope of performance bonds is necessarily limited to scenarios involving the Federal Trade Commission or whether such bonds can also be imposed in other con- tempt proceedings and/or by other federal agencies, such as the Federal Communications Commission. * Professor & Brechner Eminent Scholar in Mass Communication and Founding Director of the Marion B. Brechner First Amendment Project at the University of Florida, Gainesville, Fla. B.A., 1987, Communication, Stanford University; J.D. (Order of the Coif), 1991, McGeorge School of Law, University of the Pacific; Ph.D., 1996, Communication, Stanford University. Member, State Bar of California. The author thanks Prof. Matthew D. Bunker of the University of Alabama for his ideas that enhanced the final version of this article. \\jciprod01\productn\H\HLS\3-2\HLS201.txt unknown Seq: 2 9-MAY-12 17:24 246 Harvard Journal of Sports & Entertainment Law / Vol. 3 TABLE OF CONTENTS INTRODUCTION ............................................. 246 R I. FEDERAL TRADE COMMISSION V. TRUDEAU: SACRIFICING FIRST AMENDMENT CONCERNS TO PURIFY THE MARKETPLACE OF IDEAS? ............................................... 254 R II. SPEAKER EQUALITY, PRIOR RESTRAINTS & PERFORMANCE BONDS: THE CITIZENS UNITED PERSPECTIVE AND BEYOND . 260 R III. PERFORMANCE BONDS AND THE MARKETPLACE OF IDEAS: HOW TO DRIVE FALSEHOOD FROM THE FIELD? . 263 R IV. PERFORMANCE BONDS AND THE PARADE PERMIT ANALOGY: A DIFFERENCE WITHOUT IMPORTANCE? . 267 R V. ARE PERFORMANCE BONDS ON PAST BAD SPEAKERS VALID OUTSIDE THE REALM OF COMMERCIAL SPEECH? . 270 R VI. CONCLUSION .......................................... 273 R INTRODUCTION In November 2011, the U.S. Court of Appeals for the Seventh Circuit upheld in Federal Trade Commission v. Trudeau the imposition of a judge- ordered, $2 million performance bond1 that television infomercialist2 and 1 Performance bonds are common in the construction industry when “a party known as a surety agrees to be responsible for the performance of a contractor on a project.” Cheryl S. Kniffen, A Georgia Practitioner’s Guide to Construction Performance Bond Claims, 60 MERCER L. REV . 509, 510 (2009) (discussing 40 U.S.C. § 3131(b)(2)). According to Kniffen, the performance bond is essentially a guarantee that if the principal obli- gor (the contractor) fails or wrongfully refuses to perform the work gov- erned by the construction contract, then the secondary obligor (the surety) will either perform in the principal’s place or pay damages to the obligee (the owner or general contractor) for the breach of its principal. Id. 2 An infomercial is “a longer than average advertisement that ranges in duration from 3 to 60 minutes” and that “may appear to the viewer initially as a program rather than a commercial.” Infomercials “usually consist of segments containing demonstrations, with testimonials by experts and satisfied users separated by two internal commercials.” Tom Agee & Brett A.S. Martin, Planned or Impulse Purchases? How to Create Effective Infomercials, J. ADVER. RESEARCH., Nov.–Dec. 2001, at 35, 35 (citing GEORGE. E. BELCH & MICHAEL. A. BELCH, ADVERTISING AND PROMOTION: AN INTEGRATED MARKETING COMMUNICATIONS PERSPECTIVE (1993). See generally REMY STERN, BUT WAIT . THERE’S MORE!: TIGHTEN YOUR ABS , MAKE MILLIONS, AND LEARN HOW THE $100 BILLION INFOMERCIAL INDUS- TRY SOLD US EVERYTHING BUT THE KITCHEN SINK (2009) (providing an in-depth \\jciprod01\productn\H\HLS\3-2\HLS201.txt unknown Seq: 3 9-MAY-12 17:24 2012 / Past Bad Speakers, Performance Bonds & Unfree Speech 247 “master huckster”3 Kevin Trudeau4 must post if he ever wants to broadcast infomercials again.5 The bond, which Trudeau unsuccessfully argued vio- lated his First Amendment6 right of free speech,7 was imposed as a coercive civil-contempt measure8 — one designed to deter him from making decep- tive infomercials in the future,9 given Trudeau’s track record of televised and entertaining examination of the business of television infomercials). In the 1980s, “the infomercial quickly became a fixture on the American pop culture land- scape.” Id. at x. 3 Christopher Dreher, What Kevin Trudeau Doesn’t Want You to Know, SALON (July 29, 2005, 12:48 PM), http://www.salon.com/2005/07/29/trudeau_4 (describing the “paranoid world of master huckster Kevin Trudeau”). 4 “Trudeau has sought to portray himself as a consumer advocate fighting the establishment. He’s also a convicted felon who spent two years in prison in the 1990s for credit-card fraud.” Stephanie Zimmermann, The Weight of the Word, CHI . SUN -TIMES, Sept. 18, 2007, at News 17. See generally Catherine Bryant Bell, Com- ment, The Curious Case of Kevin Trudeau, King Catch Me If You Can, 79 MISS. L.J. 1043, 1044–74 (providing an excellent biography of Trudeau and tracing his legal woes). 5 FTC v. Trudeau, 662 F.3d 947, 953–54 (7th Cir. 2011). 6 The First Amendment to the United States Constitution provides, in pertinent part, that “Congress shall make no law . abridging the freedom of speech, or of the press.” U.S. CONST. amend. I. The Free Speech and Free Press Clauses were incorporated nearly ninety years ago through the Fourteenth Amendment Due Pro- cess Clause as fundamental liberties to apply to state and local government entities and officials. See Gitlow v. New York, 268 U.S. 652, 666 (1925). 7 Trudeau, 662 F.3d at 949 (noting Trudeau argued that “the bond requirement violates the First Amendment”). 8 See Turner v. Rogers, 131 S. Ct. 2507, 2516 (2011) (explaining that “[c]ivil contempt differs from criminal contempt in that it seeks only to ‘coerc[e] the defen- dant to do’ what a court had previously ordered him to do”) (quoting Gompers v. Bucks Stove & Range Co., 221 U.S. 418, 442 (1911)); see generally Daxton R. “Chip” Stewart & Anthony L. Fargo, Challenging Civil Contempt: The Limits of Judi- cial Power in Cases Involving Journalists, 16 COMM. L. & POL ’Y 425, 431 (2011) (ob- serving that “[i]n American law, civil contempt is intended to provide a way for courts to coerce people to comply with their orders; civil contempt is distinguished from criminal contempt, which is for punitive purposes”). 9 See Trudeau, 662 F.3d at 953 (asserting that a performance bond “makes it less likely that there will be future violations because Trudeau will face a considerable financial loss if he is involved in a deceptive infomercial”). \\jciprod01\productn\H\HLS\3-2\HLS201.txt unknown Seq: 4 9-MAY-12 17:24 248 Harvard Journal of Sports & Entertainment Law / Vol. 3 deception that caused “such tremendous consumer harm in the past”10 and in light of his violation of at least one previous court order.11 Trudeau, in fact, has been on the radar screen of the Federal Trade Commission (“FTC”) for more than a decade. A January 1998 Federal Regis- ter posting, for example, notes the FTC charging that a company called Tru- Vantage International, acting “in concert with Howard S. Berg and Kevin Trudeau, made a false and unsubstantiated claim that Howard Berg’s Mega Reading is successful in teaching anyone, including adults, children and dis- abled individuals, to significantly increase their reading speed while sub- stantially comprehending and retaining the material.”12 FTC Chair Deborah Platt Majoras, during a 2007 speech at the University of North Carolina, Chapel Hill, noted the FTC has charged Trudeau “with making false or deceptive claims in infomercials for various products or systems pur- ported to cause significant weight loss, reverse hair loss, achieve a photo- graphic memory, and cure addictions to food, alcohol, tobacco, or narcotics.”13 10 Id. at 953. As for Trudeau’s history of deception, the Seventh Circuit high- lighted his 32,000-plus broadcasts of deceptive infomercials for a book called The Weight Loss Cure ‘They’ Don’t Want You to Know About. Id. at 949. 11 See Order, FTC v. Trudeau, No. 03 C 3904 (N.D. Ill. June 29, 2004), availa- ble at http://www.ftc.gov/os/caselist/0323064/040629contempt0323064.pdf (find- ing Trudeau in contempt of court for violating part of a preliminary injunction relating to the marketing of a coral calcium supplement). 12 Tru-Vantage Internat’l, L.L.C.; Analysis to Aid Public Comment, 63 Fed. Reg. 3131 (Jan. 21, 1998), available at http://www.ftc.gov/os/fedreg/1998/january/ 980121truvantage.pdf. 13 Deborah Platt Majoras, Chair, FTC, Roy H. Park Lecture at the University of North Carolina School of Journalism and Mass Communication: The Vital Role of Truthful Information in the Marketplace 10 (Oct. 11, 2007), available at http:// www.ftc.gov/speeches/majoras/071011UNCSpeech_DK.pdf. Majoras went on dur- ing the same speech to note other instances where the FTC disputed the veracity of Trudeau’s infomercials: Trudeau claimed in subsequent infomercials that Coral Calcium Supreme, a dietary supplement purportedly made from marine coral, cured termi- nally ill cancer patients and enabled multiple sclerosis patients to get up out of their wheel chairs.
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